KOCHI: With heavy rains disrupting rubber tapping in Kerala, the largest producer in the country, and growers holding on to the available stock, natural rubber prices have vaulted to a nine-month high, raising worries for the tyre industry which has demanded imports at a reduced duty.
The price of the RSS-4 variety used by the tyre industry has risen 13% since June 1 to Rs 192 per kg on Tuesday. During the period, the international price dropped 3.6% to Rs 159 per kg . It was in October 2012 that local rubber prices had touched Rs 192 per kg.
At the end of May, Rubber Board indicated a stock of 2.35 lakh tonne in the country but the tyre industry doubted the estimate. “Growers have rubber with them. They could be waiting for a higher price to release it. A few days of sunshine will definitely see more rubber getting offloaded as growers know prices will fall once tapping begins,” said a Rubber Board officer.
The July futures contract rose to Rs 198 per kg before closing at Rs 196. Dealers say prices may touch Rs 200 per kg if rains continue to disrupt tapping. Insufficient availability has upset the calculations of the tyre industry.
“Of the 5,000 tonne of natural rubber needed by us from the domestic market in June, we could muster only about 3,000 tonne. Imports contracted now will take a month or more to arrive,” said Swaranjit Singh, director – materials, JK Tyres.
Acute scarcity has led tyre makers to request for a duty reduction in imports. “We have urged the government to allow import of 1 lakh tonne of rubber at a 7.5% duty in the place of the present 20%,” said Rajiv Budhraja, director general of Automotive Tyre Manufacturers’ Association. The association has also requested the Rubber Board to verify the natural rubber stock availability in the country up to June by an independent agency.
According to Budhraja, the estimates by the industry are that production in June could be around 25,000 tonne as against the projected 60,000 to 65,000 tonne. Tyre consumption in the replacement sector is good while the OEM segment continues to experience a slack demand.
Source: India Times
